Compromise agreements change name to “settlement agreements” on 29 July 2013

The Government revealed earlier this week that legislation changing the name of “compromise agreements” to “settlement agreements” will come into force on 29 July 2013.

The implementation date of aspects of the Enterprise and Regulatory Reform Act 2013 were released this week, including the date that “protected conversations” will become law and when “compromise agreements” will be renamed “settlement agreements”. This was specified in the Commencement Order (The Enterprise and Regulatory Reform Act 2013 (Commencement No. 2) Order 2013)¬†released by the Government earlier this week.

Under the above Commencement Order, the following provisions of the ERRA 2013 will come into force:

  • Pre-termination negotiations – under s.14 of the ERRA 2013 (in particular circumstances) discussions or offers made between an employer and an employee with a view to terminating the contract of employment will not be admissible as evidence in unfair dismissal proceedings. However, there are a number of ‘get-outs’ to this legislation – for example, if there has been “improper behaviour” or the discussions relate to a claim other than unfair dismissal (such as discrimination, for example) then the discussions may be admissible as evidence
  • Settlement agreements – under s.23 of the ERRA 2013 the name of “compromise agreements” will be changed to “settlement agreements”

The Employment Code of Practice (Settlement Agreements) Order 2013 will also come into force on 29 July 2013. On this day ACAS’s Code of Practice on Settlement Agreements will come into force. This Code of Practice will sit alongside the new legislation on pre-termination discussions and the “simplified” settlement agreement regime.

Watch this space.